Capital Allowances and Who Can Claim

Capital allowances are deductions claimable for the wear and tear of qualifying fixed assets such as industrial machinery, office equipment and sign boards. Capital allowances are generally granted in place of depreciation, which is not deductible.

Capital Allowances are Deductions for Fixed Assets

Capital allowances are deductions you can claim for wear and tear of qualifying fixed assets bought and used in your trade or business. Qualifying fixed assets include carpets, machinery and office equipment. For tax purposes, we refer to qualifying fixed assets as "plant and machinery".

Fixed assets "wear and tear" or depreciate over time. Depreciation accounted for in financial statements is not tax deductible. Capital allowance is given instead for assets that qualify. Claiming capital allowance over a period of time is also known as "writing off the asset".

Who Can Claim Capital Allowances

Companies that carry on a trade or business may claim capital allowances on expenditure incurred on the provision of "plant and machinery" for use in its trade or business.

An expense is incurred when the legal liability to pay has arisen, regardless of the date of actual payment of the money. 

Assets that Qualify for Capital Allowances

Qualifying fixed assets must be "plant and machinery" for use in your trade, business or profession. For example, a company making glass bottles may claim capital allowances for a machine that packs these bottles into boxes. In addition, capital allowances cannot be claimed on assets bought solely for donation purpose as they are not for use in the trade or business.

Capital allowances cannot be claimed on expenses for assets specifically prohibited under the Income Tax Act (e.g. S-plated private passenger car).  

Plant and Machinery

"Plant and machinery" generally refers to a fixed asset that has the following characteristics:

  1. The item is not a trading stock of your company (not for resale purposes);
  2. The item functions as an apparatus used for carrying out the business or trade activities of your company; and
  3. The item is not part of the setting or part of the premises in which your business is carried on. Those items that are part of the setting or part of the premises may be claimed as renovation or refurbishment instead under Section 14Q deduction.

For more details, please refer to e-Tax Guide on Machinery and Plant: Section 19/19A of the Income Tax Act (147KB).

  • Carpet
  • Containers used for carriage of goods by any mode of transportation
  • Electrical and electronic equipment (e.g. air-conditioning system, security/alarm system, sprinkler system and electrical appliances)
  • Furniture and fixtures
  • Industrial plant and machinery
  • Motorcycle and bicycle
  • Motor vehicle (goods / commercial vehicle such as pick up, van, truck, lorry and bus)
  • Movable partitions
  • Office equipment (e.g. computer, printer, photocopier, fax machine and telecommunication equipment)
  • Showcase or display lightings
  • Signboard and other signage
  • Venetian blind and curtain
  • Awning*
  • Container office
  • Designer's fees on renovation
  • Doors, roller shutters and gates*
  • Electrical fittings* (except cabling for identifiable plant, switchboard and transformer)
  • False ceiling, ceiling boards and other ceiling work*
  • Fixed partitions, walls, wall tiles and other wall finishes*
  • Floor tiles, raised floors or other flooring work*
  • Lightings and light fittings*
  • Motor vehicle (S-plated private passenger car)
  • Water and gas pipings*

*For expenditure incurred from 16 Feb 2008, please refer to Section 14Q deduction for the tax treatment on such renovation costs.

Assets Purchased for Use by Subcontractors and Other Parties

Companies may also claim capital allowances for expenditure on plant and machinery used by its subcontractors in outsourcing arrangements. The plant and machinery must be used solely for the purpose of the company's business to enable the company to carry on business and produce income.

Documentation Requirements

To claim, companies must prepare and retain sufficient documents as shown below. IRAS may request for such documents as part of its review process.

  1. The business arrangement with your subcontractor (e.g. a contract);
  2. The connection between the expenditure incurred on the plant and machinery, and your company's trade i.e. how providing the plant and machinery to the sub-contractor benefits your company;
  3. The level of control your company has over the plant and machinery; and
  4. Compliance with the arm's length principle for sub-contractors who are related parties.
  • Can my company claim 100% of the cost of energy efficient equipment and technology in one year?

    Yes, your company may claim the full cost of such equipment as capital allowance in one year, if the equipment is certified by a company approved by the National Environmental Agency (NEA). 

    Please refer to the NEA's website for details of accelerated capital allowance for Energy Efficient Equipment and Technology.

  • Can my company claim 100% of the cost of equipment purchased for chemical hazard control or noise control in one year?

    Yes, your company may claim the full cost of such equipment as capital allowance in one year, if the equipment is certified by a company approved by the Ministry of Manpower (MOM).

    Please refer to the MOM's website for details of accelerated capital allowance for equipment used for:

  • Can my company claim 100% of the cost of purchasing or developing website?

    Yes. A website is deemed to be plant or machinery under Section 19A(10) and the development cost or purchase cost of a website will qualify for one year write-off as capital allowance. In addition, website development cost, including costs incurred for the one-time registration of a domain name for the website, will qualify for PIC from YA2014 to YA2018.

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